The biggest concern in accommodating these new alliances is the terminals. Long Beach and Los Angeles have 13 total terminals, making them one of the few ports in the world that can handle carriers with separate shipping container handling terminals. “The new alliances will have to distribute deployments across the terminals,” said Rothberg. “Some will call at four different terminals, while others will call at two and a half or three terminals. When you are looking at the peak season and you are worried about congestion, we can look at how the 27 Asia strings distributed by terminal. We have an uneven distribution of these deployments. There will be five terminals that will be receiving these calls.”

This year, the challenges for ports are going to continue to be working with the land-side of the supply chain to quickly move cargo out of the terminals. That, however, is always the challenge of the ports, according to Rothberg. “Coordination and breaking down adversarial relationships is going to be key to making this harbor work in 2017,” he said in closing.

LOS ANGELES—Recently, consolidations and alliances dominated the shipping industry, and this year, we are going to see how these new alliances affect shipping, trade and pricing. Steven Rothberg, a partner at Mercator International, offered a look ahead at what he expects from these new alliances and a specific forecast of how they will perform in the Asia to California shipping route.

“The past 18 months have featured more structural change in the liner shipping industry than I have ever seen,” he said in his speech, offering the examples of the major recent mergers. Following rumors in October 2015, NOL sold APL to CMA in December of that year. Then, Costco and China Shipping merged in the same month. “In April, the two new firms announced the formation of the ocean alliance,” said Rothberg. “The formation of the Ocean Alliance caused them to come together to form the Transport Alliance in May.” As a result of these mergers, the liner industry has 10 global carriers, all of which are operating in three alliances.

Obviously, this will impact the Asia to California route, which is a main driver of our ports. In the second half of 2017, there will 27 total deployments, but only 23 are operated by the global alliances. “Global alliances are reducing their aggregate capacity by 5.5%, so it is only because there are going to be three new services from three independent carriers that aggregate capacity for Asia/California trade is going to go up by about 4%. You might argue that these independent carriers are going to put pressure on prices,” explained Rothberg. “Independent carriers will have to concentrate on select markets and penetrate the market quickly and successfully in order to sustain these operations.”

The biggest concern in accommodating these new alliances is the terminals. Long Beach and Los Angeles have 13 total terminals, making them one of the few ports in the world that can handle carriers with separate shipping container handling terminals. “The new alliances will have to distribute deployments across the terminals,” said Rothberg. “Some will call at four different terminals, while others will call at two and a half or three terminals. When you are looking at the peak season and you are worried about congestion, we can look at how the 27 Asia strings distributed by terminal. We have an uneven distribution of these deployments. There will be five terminals that will be receiving these calls.”

This year, the challenges for ports are going to continue to be working with the land-side of the supply chain to quickly move cargo out of the terminals. That, however, is always the challenge of the ports, according to Rothberg. “Coordination and breaking down adversarial relationships is going to be key to making this harbor work in 2017,” he said in closing.